12 October 2006
SOLONS SEEK HALT TO POWER PRICE HIKE
“If it becomes necessary, we might order a halt to the commercial operation of the Wholesale Electricity Spot Market (WESM),” Santiago said.
However, Santiago cautioned the public to keep an open mind on whether the recent price increases in the third month of the market’s operation is a result of manipulation, or merely “part of the learning curve of the market.”
“It is possible that the government agencies might have lost a lot of money in the first two months of the market, and that is why they try to increase their prices over on the third month,” she said.
Santiago was referring to the Power Sector Assets and Liabilities Management Corp. (PSALM) under President Nieves Osorio, and to the National Power Corp. (Napocor) under President Cyril de Callar.
“It is highly possible that these two agencies were bidding low during the first two months so that their power plants could be dispatched, thus incurring big losses. So in compensation, they might have tried to increase their price offer on the third month, thus causing the spike in prices,” the senator said.
Santiago said that other government agencies might be to blame for the rising prices.
“The Energy Regulatory Commission (ERC) is also suspect, because it has not yet completed the competition rules which have been pending for three years,” she said.
Santiago added that the Philippine Electricity Market Corp. (PEMC) under President Lasse Holopinen is also suspect, because it immediately leaked to the media its investigation about the alleged price manipulation.
“Consistent with market rules, it is correct for PEMC to conduct the investigation through its surveillance committee. But this should have been kept quiet until the findings were conclusive,” Santiago said.
Santiago said the present market problems are partly caused by the failure of Napocor to privatize its Luzon generation assets, which does not even reach five percent, and by the Napocor’s failure to secure bilateral contracts.
“If evidence before the Powercom establishes that there was intentional price manipulation, then we have to punish those responsible. On the other hand, if the unusual price increase was simply part of the learning curve, then the public announcement of the investigation by the market operator would have jeopardized the privatization program under the Epira Law,” she said.
Santiago told media that the main purpose of the hearing was to hear the side of the accuser, PEMC, and the side of the accused, PSALM and NPC.